XML 42 R29.htm IDEA: XBRL DOCUMENT

Fair Value of Financial Instruments (Tables)

3 Months Ended

Mar. 31, 2021

Record Amount of Assets and Liabilities Measured at Fair Value on a Recurring Basis

The tables below present the recorded amount of assets and liabilities measured at fair value on a recurring basis.

March 31, 2021	Total		Level 1		Level 2		Level 3
Investment securities available-for-sale
US government agencies	$	15,829	$	—	$	15,829	$	—
Mortgage-backed securities		755,775		—		755,775		—
Municipal bonds¹		3,573		—		3,477		96
Loans held for sale		35,936		—		—		35,936
Loans held for investment		790,797		—		—		790,797
Servicing assets²		37,744		—		—		37,744
Mutual fund		2,331		—		2,331		—
Equity warrant assets³		1,314		—		—		1,314
Total assets at fair value	$	1,643,299	$	—	$	777,412	$	865,887

December 31, 2020	Total		Level 1		Level 2		Level 3
Investment securities available-for-sale
US government agencies	$	15,919	$	—	$	15,919	$	—
Mortgage-backed securities		730,454		—		730,454		—
Municipal bonds¹		3,725		—		3,629		96
Loans held for sale		36,111		—		—		36,111
Loans held for investment		815,374		—		—		815,374
Servicing assets²		33,918		—		—		33,918
Mutual fund		2,351		—		2,351		—
Equity warrant assets³		908		—		—		908
Total assets at fair value	$	1,638,760	$	—	$	752,353	$	886,407

(1)	During the three months ended March 31, 2021, the Company recorded no fair value adjustment gain/loss. During the three months ended March 31, 2020, the Company recorded a fair value adjustment gain of $1 thousand.

(2)	See Note 7 for a rollforward of recurring Level 3 fair values for servicing assets.

(3)

During the three months ended March 31, 2021, the Company entered into equity warrant assets with a fair value of $21 thousand at the time of issuance and recorded net gains on derivative instruments of $385 thousand. During the three months ended March 31, 2020, the Company entered into equity warrant assets with a fair value of $164 thousand at the time of issuance and recorded net losses on derivative instruments of $32 thousand.

Summary of Fair Value Carrying Amount and Unpaid Principal Outstanding of Loans Under Fair Value Option

The following tables provide more information about the fair value carrying amount and the unpaid principal outstanding of loans accounted for under the fair value option at March 31, 2021 and December 31, 2020.

	March 31, 2021
	Total Loans							Nonaccruals							90 Days or More Past Due
	Fair Value Carrying Amount		Unpaid Principal Balance		Difference			Fair Value Carrying Amount		Unpaid Principal Balance		Difference			Fair Value Carrying Amount		Unpaid Principal Balance		Difference
Fair Value Option Elections
Loans held for sale	$	35,936	$	37,923	$	(1,987	)	$	—	$	—	$	—		$	—	$	—	$	—
Loans held for investment		790,797		814,729		(23,932	)		40,234		43,973		(3,739	)		26,249		29,089		(2,840	)
	$	826,733	$	852,652	$	(25,919	)	$	40,234	$	43,973	$	(3,739	)	$	26,249	$	29,089	$	(2,840	)

	December 31, 2020
	Total Loans							Nonaccruals							90 Days or More Past Due
	Fair Value Carrying Amount		Unpaid Principal Balance		Difference			Fair Value Carrying Amount		Unpaid Principal Balance		Difference			Fair Value Carrying Amount		Unpaid Principal Balance		Difference
Fair Value Option Elections
Loans held for sale	$	36,111	$	38,135	$	(2,024	)	$	—	$	—	$	—		$	—	$	—	$	—
Loans held for investment		815,374		845,082		(29,708	)		35,499		39,318		(3,819	)		25,532		28,741		(3,209	)
	$	851,485	$	883,217	$	(31,732	)	$	35,499	$	39,318	$	(3,819	)	$	25,532	$	28,741	$	(3,209	)

Schedule of Net Gains (Losses) from Changes in Fair Value

The following table presents the net gains (losses) from changes in fair value.

	Three Months Ended March 31,
Gains (Losses) on Loans Accounted for under the Fair Value Option	2021		2020
Loans held for sale	$	36	$	120
Loans held for investment		4,182		(10,758	)
	$	4,218	$	(10,638	)

Summary of the Activity Pertaining to Loans Accounted for Under Fair Value Option

The following tables summarize the activity pertaining to loans accounted for under the fair value option.

	Three Months Ended March 31,
Loans held for sale	2021			2020
Balance at beginning of period	$	36,111		$	16,198
Issuances & repurchases		—			3,045
Fair value changes		36			120
Sales		—			—
Settlements		(211	)		(212	)
Balance at end of period	$	35,936		$	19,151

	Three Months Ended March 31,
Loans held for investment	2021			2020
Balance at beginning of period	$	815,374		$	824,520
Issuances & repurchases		5,570			61,611
Fair value changes		4,184			(10,758	)
Settlements		(34,331	)		(43,947	)
Balance at end of period	$	790,797		$	831,426

Recorded Amount of Assets and Liabilities Measured at Fair Value on a Non-Recurring Basis

The tables below present the recorded amount of assets and liabilities measured at fair value on a non-recurring basis.

March 31, 2021	Total		Level 1		Level 2		Level 3
Collateral dependent loans	$	6,935	$	—	$	—	$	6,935
Foreclosed assets		4,185		—		—		4,185
Total assets at fair value	$	11,120	$	—	$	—	$	11,120

December 31, 2020	Total		Level 1		Level 2		Level 3
Collateral dependent loans	$	4,159	$	—	$	—	$	4,159
Foreclosed assets		4,155		—		—		4,155
Long-lived asset held for sale		8,874		8,874		—		—
Equity security investment with a non-readily determinable fair value		25,367		—		25,367		—
Total assets at fair value	$	42,555	$	8,874	$	25,367	$	8,314

Analysis of Level 3 Valuation Techniques

For Level 3 assets and liabilities measured at fair value on a recurring or non-recurring basis as of March 31, 2021 and December 31, 2020 the significant unobservable inputs used in the fair value measurements were as follows:

March 31, 2021

Level 3 Assets with Significant Unobservable Inputs	Fair Value		Valuation Technique	Significant Unobservable Inputs	Range
Recurring fair value
Municipal bond	$	96	Discounted expected cash flows	Discount rate Prepayment speed	4.5% 5.0%
Loans held for sale	$	35,936	Discounted expected cash flows	Discount rate Prepayment speed	0.8% to 17.4% WAVG 19.0%
Loans held for investment	$	790,797	Discounted expected cash flows Discounted appraisals	Loss rate Discount rate Prepayment speed Appraisal adjustments	0.0% to 76.3% (WAVG 1.2%) 0.8% to 17.4% WAVG 19.0% 10.0% to 65.0%
Equity warrant assets	$	1,314	Black-Scholes option pricing model	Volatility Risk-free interest rate Marketability discount Remaining life	26.6% to 89.4% 0.92% to 1.74% 20.0% 4-10 years
Non-recurring fair value
Collateral dependent loans	$	6,935	Discounted appraisals	Appraisal adjustments ⁽¹⁾	10.0% to 65.0%
Foreclosed assets	$	4,185	Discounted appraisals	Appraisal adjustments ⁽¹⁾	7.5% to 10.0%

December 31, 2020

Level 3 Assets with Significant Unobservable Inputs	Fair Value		Valuation Technique	Significant Unobservable Inputs	Range
Recurring fair value
Municipal bond	$	96	Discounted expected cash flows	Discount rate Prepayment speed	4.3% 5.0%
Loans held for sale	$	36,111	Discounted expected cash flows	Discount rate Prepayment speed	4.2% to 18.5% WAVG 19.0%
Loans held for investment	$	815,374	Discounted expected cash flows Discounted appraisals	Loss rate Discount rate Prepayment speed Appraisal adjustments	0.0% to 73.2% (WAVG 1.5%) 4.2% to 18.5% WAVG 19.0% 10.0% to 83.0%
Equity warrant assets	$	908	Black-Scholes option pricing model	Volatility Risk-free interest rate Marketability discount Remaining life	26.5-87.1% 0.36% to 0.93% 20.0% 5-10 years
Non-recurring fair value
Collateral dependent loans	$	4,159	Discounted appraisals	Appraisal adjustments ⁽¹⁾	10.0% to 83.0%
Foreclosed assets	$	4,155	Discounted appraisals	Appraisal adjustments ⁽¹⁾	10.0% to 20.0%

(1)	Appraisals may be adjusted by management for customized discounting criteria, estimated sales costs, and other qualitative adjustments.

Carrying Amount and Estimated Fair Value of Financial Instruments

The carrying amounts and estimated fair values of the Company’s financial instruments not measured at fair value on a recurring or non-recurring basis are as follows:

March 31, 2021	Carrying Amount		Quoted Price In Active Markets for Identical Assets /Liabilities (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total Fair Value
Financial assets
Cash and due from banks	$	630,081	$	630,081	$	—	$	—	$	630,081
Federal funds sold		5,461		5,461		—		—		5,461
Certificates of deposit with other banks		6,500		6,839		—		—		6,839
Loans held for sale		1,040,805		—		—		1,136,156		1,136,156
Loans and leases, net of allowance for credit losses on loans and leases		4,613,540		—		—		4,722,518		4,722,518
Financial liabilities
Deposits		6,316,004		—		6,227,312		—		6,227,312
Borrowings		1,465,961		—		—		1,451,459		1,451,459

December 31, 2020	Carrying Amount		Quoted Price In Active Markets for Identical Assets /Liabilities (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total Fair Value
Financial assets
Cash and due from banks	$	297,167	$	297,167	$	—	$	—	$	297,167
Federal funds sold		21,153		21,153		—		—		21,153
Certificates of deposit with other banks		6,500		6,906		—		—		6,906
Loans held for sale		1,139,359		—		—		1,235,122		1,235,122
Loans and leases, net of allowance for credit losses on loans and leases		4,277,250		—		—		4,366,489		4,366,489
Financial liabilities
Deposits		5,712,828		—		5,711,781		—		5,711,781
Borrowings		1,542,093		—		—		1,542,171		1,542,171